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Weekly Outlook of Financial Markets for July 1-5

June 30, 2013

The leading energy commodities such as oil bounced back last week while other commodities including gold silver and natural gas continued to trade down during last week. Will leading commodities continue to trade down? In the forthcoming week several reports, decisions and events will unfold and may affect commodities, equities and forex markets; these include: U.S non-farm employment report, GB, China and U.S manufacturing PMI, Australia’s trade balance, ECB, RBA and BOE rate decisions, Spain’s manufacturing PMI, ECB RBA and BOE rate, U.S and Canada’s trade balance reports, German factory orders, Bank of Japan’s Kuroda Speaks, and U.S. jobless claims. Here is an economic outlook for the week of July 1st to July 5th regarding the U.S, Japan, China, Euro Area, Australia, Canada, and Great Britain.

(All times GMT):

Monday, July 1st

02:00 – China Manufacturing PMI: Back in May 2013 the Manufacturing PMI inched up to 50.8 – i.e. China’s manufacturing sectors is expanding at a slightly faster pace; the recent flash PMI report was below the 50 point market. If in the upcoming report the PMI will also decline below the 50 point mark, it could signal a drop in China’s economic progress. If the index will fall, this may also adversely affect leading commodities rates;

08:45 – Italian and Spanish Manufacturing PMI: These reports will refer to June 2013. During May, the Italy’s index reached 47.3%; Spain’s PMI rose to 48.1. This means the manufacturing sectors in these countries are still contracting; these indexes may affect the Euro;

09:30 – GB Manufacturing PMI: This report will refer to Great Britain’s manufacturing sector in June 2013. In the latest update regarding May 2013 the index slightly increased to 51.3. This rate gain means the manufacturing sector is growing; this index might affect GB Pound;

15:00 – U.S. Manufacturing PMI: This report will pertain to June 2013. During May, the index dropped to 49%; this means the manufacturing is contracting; this index may affect foreign exchange rates, crude oil and natural gas markets.

Tuesday, July 2nd

05:30 – Reserve Bank of Australia – Cash Rate Statement: Following the recent rate decision of RBA to leave the cash rate at 2.75% – its lowest level –the Aussie dollar continued to trade down. Will the RBA cut again its rate this month? If the RBA will decide to reduce its rate again, this news may further drag down the Australian dollar, which tends to be strongly correlated with oil and gold prices;

15:00 – U.S Factory Orders: This report will present the developments in U.S. factory orders of manufactured durable goods during June; in the previous report factory orders declined by 1%; this report will offer some insight regarding the growth of the U.S economy;

Wednesday, July 4th

00:30 – Australian Retail Sales: This monthly update will refer to May 2013. In the previous update, the seasonally adjusted retail sales declined by 0.1% during April; this news may affect the Aussie dollar, which tends to be linked with commodities prices;

02:30 – Australian Trade Balance: The report will pertain to May. In the last update, regarding April, the seasonally adjusted balance of goods and services slipped to a $28 million surplus. The export of non-monetary gold rose by $138 million; if the gold exports will continue to rise in March, it might suggest an increase in demand for non-monetary gold (see here recent report);

13:15 – ADP estimate of U.S. non-farm payroll:ADP will come out with its estimate for the forthcoming U.S non-farm payroll change for June 2013 that will be published on Friday;

13:30 –American Trade Balance: This monthly update for May will show the changes in imports and exports of goods and services to and from the U.S, such as commodities such as oil and gas; according to the recent American trade balance report regarding April the goods and services deficit rose during the month to $40.3 billion;

13:30 – Canadian Trade Balance: In the previous report regarding April 2013, exports inched down by 0.2% and imports increased by 1.2%; as a result, the trade balance fell from a $3 billion deficit in March to $567 million in April; this report may affect the Canadian dollar which tends to be linked with prices of commodities;

13:30 – U.S. Jobless Claims Weekly Report: this weekly report will refer to the developments in the initial jobless claims for the week ending on June 28th ; in the latest report the jobless claims fell by 9k to reach 346k; this upcoming weekly update may affect the U.S dollar and consequently commodities and stocks markets;

15:00 – U.S. ISM Non-Manufacturing PMI: This monthly update will pertain to the changes in the non-manufacturing sector during June 2013. For the last report, this index inched up to 53.7% – thus, the non-manufacturing is expanding and at a faster rate than in the previous month; this index may affect the US dollar;

01:30 – Bank of Japan’s Kuroda Speaks: Bank of Japan Governor will give a speech at the Branch Managers Meeting, in Tokyo. Considering the high volatility of Japanese yen and Japan’s equity markets in recent weeks, his words could influence traders;

12:00 –BOE Rate Decision & Asset Purchase Plan: Bank of England will publish its basic rate for July 2013; the MPC will also announce of any new developments to its asset purchase pogrom; as of June, BOE left the rate unchanged at 0.5% and the asset purchase plan s at £375 billion;

12:45 – ECB Rate Decision: ECB will announce its cash rate for July. Following the last meeting in which the ECB left its rate at 0.50%, all eyes will be on Draghi’s next move. Some suspect he may keep ECB’s monetary policy unchanged. The idea of ECB providing a negative deposit rate is likely to remain in the back burner for the time being. I still think this scenario is less likely and that the ECB will leave for now its rate unchanged. Nonetheless, if ECB will cut its cash rate again, the Euro is likely to plunge and it will also drag along with it commodities prices;

Friday, July 5th

11:00 – German Factory Orders: This report will refer to the changes in the Germany’s factory orders for June; in the latest report the German factory orders declined by 2.3% (M-O-M);

13:30 – Canada’s Employment Report: In the latest employment update for May 2013, unemployment inched down to 7.1%; the employment rose by 95k during the month. The forthcoming report might affect the Canadian dollar and consequently commodities;

13:30 – U.S. Non-Farm Payroll Report: in the latest update for May 2013, the labor market rose again: the number of non-farm payroll employment rose by 175k; the U.S unemployment rate inched up to 7.6%; if in the upcoming report the employment will rise again by over 150 thousand (in additional jobs), this may slash again the prices of gold and silver (see here my last review on the U.S employment report);

15:00 – Canada’s Ivey PMI: This report shows the diffusion index based on surveyed purchasing managers; in the last month’s update, the index rose to 63.1. The report might affect the Canadian dollar;